MOVING BEYOND LEGALISM: A PEEP INTO THE ETHICAL ERA OF BUSINESS TRANSACTIONS
It is said that the sole purpose of a business is to make profit. The end has always justified the means with little or no interest put on aspects such as fairness, customer care, honesty and integrity in businesses. But with the fall of companies in the Nairobi Stock Exchange, the Wall Street Market in the United States and many other areas of the world it suffices to ask whether 'the end really justifies the means', whether business is just a matter of compliance with the laws in place. It suffices to ask whether this is the time for business and the corporate world at large to move beyond legalism and have a peep in to the world of ethics.
In conduct of business, situations may arise where managers may move beyond legalism because the law does not always hold all the answers. According to Milton Friedman as quoted by Daryl Koehn,[1] business has only one responsibility, to employ all available legal means to increase corporate profits owed to stake holders. Kohen interprets this to mean that business persons are ethical only if they struggle to do whatever the law permits but disagrees with this view and contends that what is legal is not equal to what is moral because sometimes laws can be unjust.
He states that law can be moral because it grows out of society which society's concepts are reflected in and formed by its laws. He cites a number of examples to illustrate this argument. For example, he argues that none of his business students would wish to be a CEO of a child pornography company even if the law permitted pornography because they believe that it is not morally right. He further disagrees with Friedman stating that although managers may legally lay off unneeded workers, they go ahead and provide them with job search, which act costs the corporation money and in so doing, he is acting outside the law on understanding that it is unjust to dismiss loyal workers lightly.
He explains that Friedman views are informed by the environment which teaches that so long as you act within the law, whatever you do cannot be presumed to be illegal. The courts through their interpretation of the law have not made matters any better. Koehn cites an American case, Jackson versus the City of Joliet[2] where the occupants of a car were burnt to death in full view of a policeman who did not call for an ambulance although he contacted the fire department and was sued for failure to help. The court held that one does not have a duty to rescue a stranger in distress. The Court's view was informed by knowledge that if they entertained such lawsuits of failure to help, the public purse would be drained. Koehn however faults the court in this matter for failing to distinguish between what is legally judicious and what is moral.
He further argues that Friedman fails to realize that the current applicable law could be immoral as the law applied in German when they asked truck manufacturers to make trucks that would gas passengers on transit. The bottom line is the law is not always clear and sometimes laws conflict with one another even when the law is clear. The recent disagreement between the president and the vice president as to what amounts to consultations is a clear illustration. Further as Koehn states some corporate bodies lobby for laws that favor them to be implemented by the legislature. Where that happens, the corporate body cannot argue that it acted morally if it wrote its own laws in total disregard of the community's view.
Koehn finally settles his argument by developing a theory of justice. By justice he means ability of an agent to consistently conceive of him as part of a whole community. He argues that human life is not possible unless agents take care to evaluate the benefits and harms their actions are likely to produce to others whom they live with. That although products may be legal and although Friedman's ethic would permit their productions, business professionalism would not permit their production because the products do not enrich consumer's lives. Ethical and just business people would ask regularly whether their actions take too much good for themselves and leave too much harm for others. He also adds to the discourse the concept of fair distribution. He agrees that it is not always easy to achieve the goal of fair distribution in the eyes of those affected. Koehn concludes that justice is the source of all limits and it is on justice that mature ethical individuals of integrity will want to focus.
In light of the legal and ethical requirements stipulated above, it follows that the management of the case studies tackled in the background of the study, namely; Discount Securities Ltd, Nyaga Brokering firm and Discount Securities Ltd had obvious and serious challenges as regards good corporate governance and business ethics. It also emerges that good corporate governance is a prerequisite for investor confidence in the capital markets which results in robust economic growth.
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